Volatile politics stall federal reform

The last domino has proved surprisingly stubborn. The crow eaters, it appears, have succumbed to inertia – they want change, well, sort of, but perhaps not quite yet. We won’t really know for a few days.

For what it’s worth, I think Jay Weatherill will probably hang on, either in his own right – just – or with the help of at least one of the two independents. Of course late counting and postal and pre-poll votes could yet push Steven Marshall over the line; as of Sunday night, there were still nearly a third of the votes still to tally. But given the trend to date, it looks pretty unlikely.

The Libs got a swing of about 1.5 per cent, giving them an easy win in the two party preferred, about 52.5 to 47.5. But almost all their increases came in their own safe seats. Incredibly, according to the ABC, there was actually a swing to Labor in 20 of the state’s 47 electorates. In other words, there was no concerted mood for electing a new team; even after 12 years of frequently unpopular Labor government, the It’s Time factor failed to kick in.

For this reason alone, it is unlikely that Marshall will finish the job of painting the map of Australia blue. Clearly, his campaign failed to connect, especially in the key marginal seats in which Labor concentrated its money and manpower. There is nothing to indicate that late counting will reverse this trend.

But all that said, it remains a desperately close result, meaning that whoever becomes premier is unlikely to take the bold and unpopular decisions need to haul the rust-bucket South Australian economy out of the doldrums. And it also means that if Tony Abbott ever had any serious intention to use an unusual conjunction of state and federal governments to make major inroads into the moribund federal system, he will almost certainly have to abandon them.

In practice, he may be just as glad. The path towards what has optimistically been referred to as ‘the new federalism’ is strewn with the corpses of prime ministers far more dedicated to the cause than our present pragmatic leader. Abbott, like just about all our previous prime ministers, acknowledges that the system is in serious need not just of a major servicing but of a complete overhaul. In his 2009 manifesto Battlelines he described it as dysfunctional. But just what he wants to do about it remains unclear.

At one stage he appeared to be proposing the traditional conservative remedy of devolution – reversing the century-long trend of the commonwealth accumulating power at the expense of the states and giving them more responsibility in fields such as education and health. Yet only a couple of years earlier as John Howard’s health minister he had been canvassing the idea of a full commonwealth takeover of the hospital system. His plans for education involve shutting the states out altogether and giving control of the schools to local boards, but with the commonwealth maintaining its right to interfere in and if necessary rewrite the schools curriculum.

On the key question of vertical fiscal imbalance – the fact that while the states do most of the spending they rely on the commonwealth to collect the revenue and dole it out to them – he has little to say: there is to be a review of the tax system, along with just about everything else, but the GST, the states’ only serious source of income, is off the table at least for this term of government. As the former Treasury head Ken Henry has pointed out, it will have to be considered, and probably increased, in the foreseeable future.

But that is so far beyond the next Newspoll that it can be, and has been, comfortably ignored for the moment. And this, of course, is where Abbott’s opportunity to exploit the conservative coalition gets well and truly lost, because the map is not going to get any bluer; indeed, from here on the only way it can go is red. Within 12 months both Victoria and Western Australia will go to the polls, and in neither case can the incumbent Liberals feel confident about the outcome.

Not that Dennis Napthine and Colin Barnett have shown themselves to be all that eager to cooperate with Canberra anyway, whoever is in power. And at times Barry O’Farrell in New South Wales has been positively unhelpful to Abbott’s cause, while being among the first premiers to sign up to Julia Gillard’s Gonski package. Being in the same party – even in the same state branch – is no guarantee of solidarity when votes are on the line.

As Paul Keating pointed out, the premiers just want to get at the money and they’re not all that particular where it comes from, as long as there’s plenty of it and it comes without too many strings attached. The problem with serious reform is that it does not necessarily involve immediate transfers of buckets of cash, and if it does, there is likely to be a price demanded, a price which premiers beset by problems of their own will be unwilling to pay.

Just ask Kevin Rudd – in 2007 he came to power with wall-to-wall Labor premiers across the country and immediately announced his own grandiose plans for a new federation. In practice he was unable to get even his initial health reforms into play before bits of the map started to go blue again, and then the GFC took over, giving him a welcome excuse to abandon federal repair work while he fixed the commonwealth. Abbott will no doubt claim a similar need to repair the budget, end the waste and pay the debt, etc, if his own attempts at rejigging the system look like going off the rails.

But at least he will be able to rely on Tasmania. Michael Hodgman, having ended up in full control of the terminally mendicant island state, will be totally dependent on commonwealth largesse. Whatever happens to the mainland, Abbott will always have one safe haven – at least while he retains the keys to the treasury. Whoever thought that little Tassie would end up as the one piece of firm political ground left to our always changeable prime minister?